In 2012 I was looking at investing in REITs. One REIT's pitch was that they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa.
Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it.
We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.
We have spent decades telling American families that homeownership is the safest investment. We then spent decades enacting policies to ensure this is true. Do we think investors were going to just sit that out and ignore a safe and government protected investment?
Of course the more attractive we make home ownership as an investment, the more investors will flock to the market. We need policies specifically benefiting owner occupied homes or we need to stop treating the basic human need for shelter as an avenue for investment.
Neither seems likely to happen because we have already waited so long that the moneyed interests now have too much to lose and won't allow what needs to be done to happen.
> The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach.
I'm involved with a local YIMBY group, and what I see over and over again is my neighbors stopping homes from being built. No wonder investors think it's a great place to put some money - other people do the dirty work for them!
> We have spent decades telling American families that homeownership is the safest investment. We then spent decades enacting policies to ensure this is true. Do we think investors were going to just sit that out and ignore a safe and government protected investment?
So one group wants to maintain a financial investment that was sold to them as a sure-fire way to make money with little work and little risk, and another group wants...shelter. If it truly is the case that the desires of these two groups are butting up against each other and are mutually exclusive, is it really hard to decide which group should get what they want?
I sold my houses in a booming market for a $70,000 loss intentionally. It has a nice effect of lowering the value of all my neighbors homes and housed a deserving family.
Little did I know when I went to claim the loss on my taxes: I could not claim the loss at all. Since it was an owner occupied house and not a house owned by a corporation, it did not count as a loss I could deduct from my income nor from my capital gains.
Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
The system is a racket designed to continuously inflate home prices.
Everyone participating in it should be ashamed for making their children serfs & homeless while they live in castles.
I would like to think that we are still able to take things back onto our own hands by making better choices and educating ourselves and shunning for-profit companies.
I, for one, would find it better to not spend my final days at the most profitable nursing home.
Answering your last paragraph: Worst case scenario, it'll probably take a couple of generations of literally living at our parent's house, waiting for the investor class to die out clenching the deeds to all houses and then finally being able to take back the world and start responsibly owning stuff. The cynic in me says that living at one's parents would be outlawed by political cronies.
>> We have spent decades telling American families that homeownership is the safest investment.
Home ownership is a key part of retirement, as reducing monthly bills is critical and rent is a big one. It has been a fairly profitable investment for 30 years of decreasing interest rates, but it is no longer so.
There's a huge amount of capital available and borrowing is still cheap.
I don't know in the US but in many European locations building of new housing has drastically slowed down over the past decades, which naturally puts am upward pressure on the market.
There is no need to demonise investing in property, which not the root of the problem (and frankly is often an ideological stance).
If anything, there should be more investment in new buildings to boost supply but very often the problem is planning restrictions.
> We need legislation that discourages housing as investment if we are to maintain housing as shelter.
I'm looking forward to hearing how Vancouver's vacant house tax affects their market the next few years. It sounds like a good idea and I'm glad they're running that experiment. It's hard to predict how these things go over time.
That does sound like a correct solution. It gives investors an incentive to make sure the houses are not vacant, which drives the rent down. Others should not be affected much by it, so that's a great solution.
Edit: assuming the situation is where there are vacant homes and people willing (but not able to afford) to live in them.
We just need to remember that banning housing investment means banning rentals which is problematic for people who don't have good credit and a down payment.
There are ways to disincentivize toxic forms of investment (especially speculation) without banning it. A high land value tax, for example, would simultaneously increase investment and decrease speculation.
You can crowd out usury private investment (which this specifically is an example of) with government investment. Have the Fed buy treasuries, use federal funds to build and manage affordable housing.
Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will.
Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.
IMHO cities need to limit how many large multi-national conglomerates are allowed to build huge rental complexes.
A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years.
Also large rental complexes don't build communities.
Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.
The concept of credit score isn't something that has always existed in humanity. It's something that we can go on without, even more so given the ridiculous profitability of banks
Apartment complexes are for more economically efficient compared to single family homes. We need to incentivize these instead of letting them buy up homes meant for a single family.
Apparently some of these operations have become pretty sophisticated in being able to quickly sort and evaluate listings. Individual buyers don't stand much of a chance against buyers who can write a check as soon as a property hits the market.
There are so many housing incentives (tax-breaks, etc.) designed to encourage home ownership a very simple solve would be to ensure those only apply to owner-occupied housing and limited to a single home per household.
As another commenter pointed out - most tax incentives for living in a home you own do not apply to investors. Investors get those benefits "for free" because they are a business and all the costs of running a business are deductible. The incentives you speak of actually puts regular folks on a more even footing as corporate folks.
Stuff like bonus depreciation - yeah, let's get rid of that. Or 1031 exchanges. Regular folks cannot benefit from it.
Companies are charged taxes on their profits. The interest on money borrowed in furtherance of a business is just like any other business expense: deductible.
The owner-occupied mortgage interest deduction serves to put owner-occupants onto the same footing as businesses; it’s not an incentive that gives them preference, but rather (closer to) equal footing.
> they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa
A related anecdote. 15 years ago, an investment advisor was pitching us on investing in water funds. Yes, the move to privatize water was well underway a quarter decade ago because the people with money KNEW we would have a world where rivers in multiple continents running out of water in the future.
That it's come sooner than most predicted is likely making those ghouls salivate even more.
Needless to say, we turned him down and just plunked our money into index and sustainable funds and chose handpicked stocks instead.
What discourages owning housing as an investment is repealing legislation that inhibits construction. Nothing else (besides laws affecting population growth) changes the fundamental supply/demand meeting point, in the long run.
Other laws which discourage investment will also discourage construction.
People in ivory towers whipping black-box abstractions of businesses into needing to produce more profits through wage theft, cost-cutting by skirting regulations, or outsourcing to unregulated places.
There's little oversight throughout the process, and filled with the kind of people that want to turn everything into a business... and that have proposed "treating but not curing cancer" [1].
I agree, and I feel like limiting the mortgage interest deduction to owner-occupied homes would get us most of the way there at the stroke of a pen. It's a huge subsidy and I can't think of any good reason to extend it to rentals and investment properties.
In fact, we should probably repeal it altogether - in theory it subsidizes home ownership for the poor and middle class, but in practice the only people who take it are those who itemize deductions, which the poor generally don't.
Not sure if you are aware, but all forms of interest expense is tax deductible for corporate income tax purposes in the United States, not just mortgage interest. This conforms to codes in other countries. There is no subsidy that is specific enough to rentals or investment properties. And since most of corporate bank lending is secured by all assets (including real estate), mortgage debt is somewhat fungible with other secured corporate debt, so it would be pointless to try to tax one but not the other.
> that discourages housing as investment if we are to maintain housing as shelter.
There’s a difference between owning two properties and owning a fund of thousands of homes (PE and REITs). The former is fine, the latter should be banished
the worst aspect of this is that these landlord corporations are of course going to be paying off politicians to create laws, regs etc that will further restrict and make more costly the building of new housing... it's a vicious circle
But housing is an investment, and a shelter. Discouraging housing as an investment discourages investment in housing.
What I think you are trying to say is that it is preferable that the investment in housing be made by the people who are going to live in the house (or by the government) and not by entrepreneurs.
I have considerable experience in the Real Estate backend software industry, and so am occasionally contacted by headhunters hiring for Real Estate Investment startups. Here's a typical reply that I give to them:
I am philosophically opposed to "investing" in real estate, as your industry exists entirely to snatch up affordable housing from actual homeowners as a get-rich-quick scheme, benefiting those who are already rich at the expense of those who would otherwise be rising up out of their own financial situation.
Nothing personal, but I wish you - and everyone in your predatory industry - swift failure in your endeavor, for the benefit of the average homeowner.
Have a good day!
When it concerns basic necessities it certainly is. It would be sensible if nations restrict access to these markets and heavily tax people not using their real estate themselves with a progressive tax that increases quickly with additional objects. It could be fixed quickly if there was political will to do so.
You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again!
Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
I worked for several years at a small company whose primary products/services involved aggregating/normalizing/warehousing/publishing listing data, which grew to handle a large percentage of all listings in the country. I knew every quirk and metadata mis-feature of every MLS software in use, and was on the technical standards board of the National Association of Relators. Our company was bought out by one of the big user-facing Real Estate websites, and our team was responsible for the listing collection/normalization pipeline.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is:
* flippers
* middle class individuals buying a second property as an investment
* small time property management firms run by local businesses
Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up.
Don't forget the "kilo" investors, who may only own a few dozen or hundreds of homes ;)
Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states:
> Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases.
So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors.
The 1/4 of houses being bought by investors makes this sound like way more than it truly is... I bet 90% of those "investors" are flippers.
Flippers are a necessary part of the market... lots of old people stop maintaining their home as they age. When they finally die, their homes are in extremely bad shape and no one would want to live there. A flipper makes the home habitable again.
This is true, similar to what's going on in Australia.
It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD.
So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
What's nuts is not just that investors get to buy homes, but that its tax advantaged to do so. Between prop 13 in California, to 1031 exchanges, there are plenty of reasons to invest in RE over even say the stock market. I don't get to do a 1031 exchange for my Meta stock into AAPL or something...
You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.
This is what I find concerning though, we're now seeing the damage of the endless money printing, through inflation.
Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown.
Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.
In fact, the previous president signed a law removing 1031 exchange for everything except real estate. Coincidentally, the previous president is in the real estate business.
Hilarious sure, but also sad and concerning. I'm tentatively alright with the idea of renting forever and never owning property... but with rent increasing and investors buying up more and more property, it looks like things will get uglier and uglier.
Other people are playing the "enrich themselves at the expensive of the collective" game, so you should too. The move in this situation is to seek out rent control. That will cap rent increases for you at like 5% a year in most places. If you are able to swing a few promotions at work while staying in this same place, you might come out well ahead of any potential rent increases and manage to start actually saving and investing money. This is the route to property ownership a lot of people I know in southern california are taking.
Well, the idea that owner will be saddled with serious repair and maintenance whereas renter on virtue of being a renter will just move out to house on next street risk free seems unsustainable to me.
Increasing rents are a kind of distributing risks of costly maintenance that renters doesn't want to care about.
In a competitive market (I'd say even the biggest investors own <10% of the markets they operate in), rents are bounded by competition. The bigger reason rents are going up is there is not enough supply for people to live in. Things like environmental reviews, zoning policy, mandatory low income units, and "historical" buildings make it very unappealing or impossible to develop new housing.
At the very least, replacing all SFH with townhouses would give 2x density increase. Removing the height limit on new construction and allowing rebuilds of old apartment buildings without excessive permitting would probably give another 3x increase.
LA for example is built into the 90% range of its zoned capacity today of 4.3 million people with a population of just under 4 million by official counts (higher in actually no doubt). Meanwhile, in the 1960s when homes in LA were actually affordable, the population was 2.5 million, with a zoned capacity of 10 million. That means if we want to make LA as affordable as it was in the 1960s, then we should zone the city for at least 16 million people, instead of 4.3 million people as it is zoned today.
These are just bandaid solutions that do little to solve the underlaying problem and well established fact that we simply haven't been building enough homes over the last 50 years. Proposals that don't address this, or remove capital from the market should be met with skepticism imo.
The high rate of rentals owned by individual investors is bad too if our goal is to maximize the number of home owners. I know a lot of people in my cohort who bought and moved into a new home, but kept their previous home as a rental. IMO this option is only accessible to large amount of people during this unique time because of government policy, ultra low interests rates, and societal trends. I think a large part of it is a government incentivized system that rewards incumbents in a disproportional manner. I think this disparity is contributing to overall feelings of resentment and will contribute to social issues and political turmoil.
It will be interesting to see how that plays out now that interest rates are rising. Honestly it feels a lot like 08 all over again. Somebody decided to go and get another home as an investment property, they leveraged themselves but took advantage of the low interest rates and a 20 year mortgage, it was a smart idea at the time, prices kept going up, they could just keep bumping rent because where would anyone else go, everywhere was getting more expensive.
Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.
The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
1000 is too high a threshold. I wonder what it would look like if you dropped to 50 or 100.
I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough.
But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
IMO extra properties should be heavily taxed. Say you have more than 3, it should basically not be profitable anymore. No one wins if people are hoarding houses
If your mortgage is 1000 and you charge 3 Students 700 a head, you now have 1100 left over. Put 500 away for repairs and pocket the 600. 600x5 = 3000 USD Straight Profit. If you don't put anything away for repairs: 2100 - 1000 = 1100 x5 = 5,500 a month = 66,000 a year for 5 homes
That is shockingly bad. I was going to make a comment about how ridiculous your comment is..until I did the math! Kudos
Readit News
Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it.
We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.
Of course the more attractive we make home ownership as an investment, the more investors will flock to the market. We need policies specifically benefiting owner occupied homes or we need to stop treating the basic human need for shelter as an avenue for investment.
Neither seems likely to happen because we have already waited so long that the moneyed interests now have too much to lose and won't allow what needs to be done to happen.
https://www.vox.com/platform/amp/22524829/wall-street-housin...
> The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach.
I'm involved with a local YIMBY group, and what I see over and over again is my neighbors stopping homes from being built. No wonder investors think it's a great place to put some money - other people do the dirty work for them!
So one group wants to maintain a financial investment that was sold to them as a sure-fire way to make money with little work and little risk, and another group wants...shelter. If it truly is the case that the desires of these two groups are butting up against each other and are mutually exclusive, is it really hard to decide which group should get what they want?
Little did I know when I went to claim the loss on my taxes: I could not claim the loss at all. Since it was an owner occupied house and not a house owned by a corporation, it did not count as a loss I could deduct from my income nor from my capital gains.
Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
The system is a racket designed to continuously inflate home prices.
Everyone participating in it should be ashamed for making their children serfs & homeless while they live in castles.
I, for one, would find it better to not spend my final days at the most profitable nursing home.
Answering your last paragraph: Worst case scenario, it'll probably take a couple of generations of literally living at our parent's house, waiting for the investor class to die out clenching the deeds to all houses and then finally being able to take back the world and start responsibly owning stuff. The cynic in me says that living at one's parents would be outlawed by political cronies.
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Home ownership is a key part of retirement, as reducing monthly bills is critical and rent is a big one. It has been a fairly profitable investment for 30 years of decreasing interest rates, but it is no longer so.
I don't know in the US but in many European locations building of new housing has drastically slowed down over the past decades, which naturally puts am upward pressure on the market.
There is no need to demonise investing in property, which not the root of the problem (and frankly is often an ideological stance).
If anything, there should be more investment in new buildings to boost supply but very often the problem is planning restrictions.
I'm looking forward to hearing how Vancouver's vacant house tax affects their market the next few years. It sounds like a good idea and I'm glad they're running that experiment. It's hard to predict how these things go over time.
Edit: assuming the situation is where there are vacant homes and people willing (but not able to afford) to live in them.
Turns out having 10 people and 9 homes remains a problem, even if you enact more policies.
They’ve tried everything, except build enough homes. I’m under the impression this is the popular modern across North America
Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will.
Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.
A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years.
Also large rental complexes don't build communities.
Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.
There definitely needs to be some rentals, but I believe that there needs to be controls over how many and the rental price.
Stuff like bonus depreciation - yeah, let's get rid of that. Or 1031 exchanges. Regular folks cannot benefit from it.
The owner-occupied mortgage interest deduction serves to put owner-occupants onto the same footing as businesses; it’s not an incentive that gives them preference, but rather (closer to) equal footing.
Deleted Comment
Is there antitrust statute for housing stock?
That it's come sooner than most predicted is likely making those ghouls salivate even more.
Needless to say, we turned him down and just plunked our money into index and sustainable funds and chose handpicked stocks instead.
Other laws which discourage investment will also discourage construction.
People in ivory towers whipping black-box abstractions of businesses into needing to produce more profits through wage theft, cost-cutting by skirting regulations, or outsourcing to unregulated places.
There's little oversight throughout the process, and filled with the kind of people that want to turn everything into a business... and that have proposed "treating but not curing cancer" [1].
[1] https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patie...
In fact, we should probably repeal it altogether - in theory it subsidizes home ownership for the poor and middle class, but in practice the only people who take it are those who itemize deductions, which the poor generally don't.
As an investor, you don't have a mortgage interest deduction benefit. You have a business expense benefit.
There’s a difference between owning two properties and owning a fund of thousands of homes (PE and REITs). The former is fine, the latter should be banished
What I think you are trying to say is that it is preferable that the investment in housing be made by the people who are going to live in the house (or by the government) and not by entrepreneurs.
Hi there!!
You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again!
Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is:
* flippers
* middle class individuals buying a second property as an investment
* small time property management firms run by local businesses
Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up.
[0] https://moodys-talks-inside-economics.simplecast.com/episode...
Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states:
> Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases.
So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors.
[1] https://www.corelogic.com/intelligence/single-family-investo...
Flippers are a necessary part of the market... lots of old people stop maintaining their home as they age. When they finally die, their homes are in extremely bad shape and no one would want to live there. A flipper makes the home habitable again.
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Investors Are Buying Mobile Home Parks. Residents Are Paying a Price https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner...
It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD.
So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown.
Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.
https://krscpas.com/the-tax-cuts-and-jobs-act-tcja-and-code-...
I am not alright with paying absurdly high rent.
Then you should either:
1) Buy a house to live in
2) Buy a house to hedge against rents going bananas
The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
This sounds akin to feudal peonage.
Increasing rents are a kind of distributing risks of costly maintenance that renters doesn't want to care about.
At the very least, replacing all SFH with townhouses would give 2x density increase. Removing the height limit on new construction and allowing rebuilds of old apartment buildings without excessive permitting would probably give another 3x increase.
My wife and I were able to buy a house in Baltimore City while both attending graduate school
https://la.curbed.com/2015/4/8/9972362/everything-wrong-with...
On this post I wrote:
> A couple ideas for how to fix some real estate problems:
> 1. A zoning rule that requires home owners to live in the owned home. ...
And the general response?
> The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors.
> None of this would have much impact.
> This would reduce the housing stock.
Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.
I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough.
But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
That is shockingly bad. I was going to make a comment about how ridiculous your comment is..until I did the math! Kudos